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Minnesota Rent-to-Own (Lease Option) Agreement

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Updated on September 25th, 2021

A Minnesota rent-to-own agreement is a legal contract between a landlord/seller and a tenant/buyer that establishes a lease agreement and a purchase agreement for real property. This type of arrangement involves the tenant paying rent during a fixed-term lease period with a portion of that rent usually going towards the down payment on the property.

The seller will often charge a deposit (also known as an option fee), which ensures the tenant/buyer is serious about purchasing the property. The length of the lease, the rent amount, percentage of rent credit, option deposit, and purchase price are key terms in a rent-to-own agreement. They should be negotiated and agreed upon by the parties before executing the agreement.

Lease Laws – Chapter 504B (Landlord and Tenant)

Purchase Agreement Laws – Chapter 507 (Recording and Filing Conveyances) and Chapter 513 (Agreements Relating to Property)

Disclosures (5)

  1. Financial Distress
  2. Landlord/Manager Information
  3. Lead-Based Paint
  4. Notice of Tenant’s Rights
  5. Outstanding Inspection Orders

1) Financial Distress

Landlords must notify tenants before entering into a lease agreement if they have received any notice, summons, or complaint involving foreclosure of the rental property.

2) Landlord/Manager Information

The names and addresses of the landlord, the owner, and any other person authorized to manage the premises or send and receive notices must be provided to the tenant.

3) Lead-Based Paint Disclosure

It is required by federal law that landlords notify prospective tenants that lead-based paint could exist on the premises if the property was constructed prior to 1978.

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4) Notice of Tenant’s Rights

The landlord is required by state law to notify tenants (by posting in a conspicuous place on the property) that the attorney general’s Landlords and Tenants Rights and Responsibilities Handbook is available to them for education in the rights and responsibilities of landlords and tenants.

5) Outstanding Inspection Orders

Landlords must provide tenants with a copy of any inspection orders received due to a citation being issued for code violations pertaining to the tenant’s rental unit or the common areas of the rental property that threatens the health and safety of occupants.

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